Starknet rolled out STRK20, a note-based privacy layer for ERC-20 tokens, on Tuesday, allowing users to shield balances and conduct private transfers and swaps on the Ethereum layer-2 network.
The launch is the first phase of STRK20, a framework Starknet has been building since its v0.14.2 protocol upgrade in April, which introduced native in-protocol proof verification.
STRK20 operates as a note-based privacy pool rather than a mixer. When a user shields an ERC-20 token, it is deposited into the pool and represented as an encrypted note. Private transfers spend existing notes and generate new ones. Each transfer is validated by a zero-knowledge proof confirming that the notes spent exist, belong to the spender, have not been double-spent, and that input and output amounts balance.
Starknet verifies the proof on-chain before updating pool state. Public observers can see encrypted notes and required protocol metadata, but cannot see the sender, receiver, amounts, or which balances were used, according to Starknet's announcement.
STRK20 includes an encrypted viewing-key framework designed to address regulatory requirements. A third-party audit firm holds a viewing key that can be used to trace specific transaction history in response to a valid legal or regulatory request, without exposing uninvolved users.
